It is so popular because these days, the Foreign Exchange Market
(Forex) is the most profitable sector to invest in.
OK, let me explain further. The Spot Forex market is the most liquid. It
is called “Spot FX”, meaning that trades are settled within two banking
days. There is no central exchange or physical location. Trading takes
place over-the-counter, 24-hours a day directly between the two
parties of a trade over the telephone and electronically.
As a true 24-hour market, trading begins each day in Sydney and
moves around the globe as the business day begins in each financial
center, first to Tokyo, London, and New York. Unlike any other market,
investors can respond to currency fluctuations caused by economic,
social and political events at the time they occur, day or night.
Below are some reasons why forex trading is now very popular:
Liquidity:In the FOREX market there is always a buyer and a seller! The FOREX
absorbs trading volumes and per trade sizes which dwarfs the capacity
of any other market. On the simplest level, liquidity is a powerful
attraction to any investor as it suggests the freedom to open or close a
trading position at will 24 hours a day, without any physical presence.
Once purchased, many other high-return investments are difficult to
sell at will. FOREX traders never have to worry about being “stuck” in
a position due to lack of market interest. It is a 1.5 trillion U.S. dollar
per day market.
24-hour, 5 days a week market:
The FOREX is open 24 hours daily from about 5:00 P.M. Sunday to
about 4:00 P.M. Friday. An individual trader can react to news when it
breaks, rather than waiting for the opening bell of other markets when
everyone else-has the same information.
High liquidity and 24 hour trading permit market participants to take
trading positions or exit the trade regardless of the hour. There are
FOREX dealers in every time zone, in every major market center
(Tokyo, Hong Kong, Sydney, Paris, London, United States, etc.) willing
to continually quote buy and sell prices. You can trade and make
money anytime of the day, even while relaxing on the beach.
2-ways market (profit whether market is rising or falling)”
Currencies are traded in pairs, for example dollar/yen, or dollar/Swiss
franc. Every position involves the selling of one currency and the
buying of another. If a trader believes the Swiss franc will appreciate
against the dollar, the trader can sell dollars and buy francs (this is
also called “selling short’).
If one holds the opposite belief, the trader can buy dollars and sell
Swiss francs (“buying long”). The potential for profit exists because
there is always movement in the exchange rates (prices).
FOREX trading permits profit taking from both rising and falling
currency values in relation to the dollar. In every currency trading
transaction, one of the sides of the currency pair is always gaining and
the other side is losing.
Leverage:
This is one of the major attractions in Forex Trading. That is why Mr.
Collins is trading Forex! This simply means that you can deposit a
small amount in order to trade a particular currency size. The Forex
Broker provides you with a Margin Account in which you can make a
small deposit, depending on the leverage, and start trading a much
bigger currency size. For example, if your broker allows you a Margin
Account of 1:100, this means you can make deals on $100,000 with
just a deposit of $1,000 in your account. Or, you can make deals of
$10,000 with just $100 in your account.
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